JPY Swaps: JPY rates lose winning streak as Nikkei spikes; 5-10y bid

Chart numbers 14 Jun 2022
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The JPY rates market lost its winning streak as Japanese equities spiked. 5-10y swaps have been bid with 10y underperforming other maturities.

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  • JPY rates weaker as Nikkei spikes

  • 5-10y bid; 10y underperforms

 

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JPY rates weaker as Nikkei spikes

After six consecutive days of gains, the JPY rates market was weaker today amid a lift in risk appetite following the rally in US equities in overnight trading. Profit-taking has also been part of the reasons for a selloff in JPY rates.

 

The Nikkei 225 Index was up by 1.77% after lunch break, dampening demand for JPY rates. JGB future was down by close to 40-ticks in the afternoon session before trimming losses to mark 26-ticks lower at 147.37 in mid-afternoon Tokyo trading. The yield on the benchmark 10-year JGB was 2bps higher at 0.403%.

 

 

5-10y bid; 10y underperforms

Losses in the cash bond market have prompted paying in the 5- to 10-year area of the swap curve.

 

A dealer reported bid-side flow in 10-year since market open. It traded 2-3bps higher in the morning session, and paying intensified after lunch break and it traded up to 8bps higher. It was last seen changing hands 4.5bps higher of 0.79%.

 

7-year traded in a tight range around 0.5775% in the morning session, or 2.75bps higher than previous close. 5-year traded mostly around 0.4% in the morning before traded up to 5.5bps higher of 0.44% after lunch break. The belly was marked around 2-3bps higher at time of writing.

 

10-year has been slightly underperforming other maturities on the selloff. 5s/10s swaps therefore steepened up by 2.5bps to 38.5bps while 10s/20s swaps were 4bps flatter at 43bps.